Deutsche Bank will reportedly stop offering correspondent banking services to local financial institutions in Malta.
According to the Times of Malta, the German lender will stop the service in all currencies by the end of this year.
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There was no official announcement from Deutsche Bank or Malta authorities on the decision.
However, it was conveyed to all the partner banks in a meeting held earlier this month, the report added.
Correspondent banks assist local lenders in accessing foreign financial markets and carry out cross-border transactions in foreign countries. These transactions are carried out primarily in US dollars.
Therefore, the decision by Deutsche Bank is likely to impair partner Maltese banks’ capabilities to conduct dollar-denominated transactions.
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By GlobalDataHowever, most of the impacted banks will have a second correspondent bank to conduct such operations, a source familiar with the matter told the publication.
The Deutsche Bank move comes after Malta was sharply criticised by the Council of Europe’s anti-money laundering body for failing to take adequate measures to prevent financial crime.
Recently, Deutsche Bank significantly scaled back its operations as a correspondent bank following money laundering allegations generating from such activities.
Earlier this year, the German lender initiated a massive restructuring of its business to revive market value and share prices. The plan included axing thousands of jobs and is expected to cost the company around €7.4bn.
